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SOURCES AND METHODS OF FOREIGN NATIONALS

ENGAGED IN ECONOMIC AND MILITARY ESPIONAGE

HEARING

BEFORE THE

SUBCOMMITTEE ON IMMIGRATION, 

BORDER SECURITY, AND CLAIMS

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

SEPTEMBER 15, 2005

Serial No. 109–58

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

CHRIS VAN HOLLEN, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, General Counsel-Chief of Staff 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON IMMIGRATION, BORDER SECURITY, AND CLAIMS

JOHN N. HOSTETTLER, Indiana, Chairman

STEVE KING, Iowa 

LOUIE GOHMERT, Texas 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

JEFF FLAKE, Arizona 

BOB INGLIS, South Carolina 

DARRELL ISSA, California 

SHEILA JACKSON LEE, Texas 

HOWARD L. BERMAN, California 

ZOE LOFGREN, California 

LINDA T. SA ́ NCHEZ, California 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts

GEORGE FISHMAN, Chief Counsel 

ART ARTHUR, Counsel 

ALLISON BEACH, Counsel 

LUKE BELLOCCHI, Full Committee Counsel 

CINDY BLACKSTON, Professional Staff 

NOLAN RAPPAPORT, Minority Counsel 

(III)

C O N T E N T S 

SEPTEMBER 15, 2005

OPENING STATEMENT 

Page 

The Honorable John N. Hostettler, a Representative in Congress from the 

State of Indiana, and Chairman, Subcommittee on Immigration, Border 

Security, and Claims ............................................................................................ 1

The Honorable Sheila Jackson Lee, a Representative in Congress from the 

State of Texas, and Ranking Member, Subcommittee on Immigration, Border Security, and Claims ..................................................................................... 2

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Member, Subcommittee on Immigration, Border Security, 

and Claims ............................................................................................................ 5

WITNESSES 

The Honorable Michelle Van Cleave, National Counterintelligence Executive, 

Office of the Director of National Intelligence 

Oral Testimony ..................................................................................................... 7

Prepared Statement ............................................................................................. 10

Dr. Larry Wortzel, Visiting Fellow, The Heritage Foundation 

Oral Testimony ..................................................................................................... 19

Prepared Statement ............................................................................................. 21

Mr. Maynard Anderson, President, Arcadia Group Worldwide, Inc., and 

former Deputy Under Secretary of Defense for Security Policy 

Oral Testimony ..................................................................................................... 23

Prepared Statement ............................................................................................. 25

Dr. William A. Wulf, President, National Academy of Engineering, The National Academies 

Oral Testimony ..................................................................................................... 30

Prepared Statement ............................................................................................. 34

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Map on the ‘‘Number of Patent Applications and Foreign Students Per County,’’ submitted by the Honorable John Hostettler, a Representative in Congress from the State of Indiana, and Chairman, Subcommittee on Immigration, Border Security, and Claims ...................................................................... 57

Prepared Statement of the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Ranking Member, Subcommittee 

on Immigration, Border Security, and Claims ................................................... 58

New York Times Article submitted by the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Immigration, Border Security, and Claims ................................ 59

The National Counterintelligence Strategy of the United States, submitted 

by the Honorable Michelle Van Cleave, National Counterintelligence Executive, Office of the Director of National Intelligence .......................................... 61

Revised Prepared Statement of Dr. Larry M. Wortzel, Visiting Fellow, The 

Heritage Foundation ............................................................................................ 75

(1)

SOURCES AND METHODS OF FOREIGN NATIONALS ENGAGED IN ECONOMIC AND 

MILITARY ESPIONAGE 

THURSDAY, SEPTEMBER 15, 2005

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON IMMIGRATION,

BORDER SECURITY, AND CLAIMS, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:26 p.m., in Room 

2141, Rayburn House Office Building, the Honorable John 

Hostettler (Chairman of the Subcommittee) presiding. 

Mr. HOSTETTLER. The Subcommittee will come to order. 

We pride ourselves on being an open society in America. We 

allow millions of foreign nationals to come to our shores each year 

as tourists, business visitors, and students. Unfortunately, some of 

these business visitors have come here to take advantage of our 

openness and engage in economic and military espionage. 

Earlier this morning in a closed session, the Subcommittee heard 

a disturbing report given by the Nation’s top counterintelligence official regarding economic and military espionage by foreign nationals in the United States. We will shortly hear a sanitized version 

of this testimony. 

In the past few months alone: American University researcher 

and Chinese national Zhan Gao pled guilty to illegally exporting 

technology that can be used in missile guidance and airborne battle 

management systems for a $590,000 payment from China. Chinese 

nationals, Jian Guo-qu and Ruo Ling Wang, were arrested in Milwaukee for conspiring to illegally export more than $500,000 in restricted electronic military radar components to China. Iranian 

Abbas Tavakolian was sentenced to 57 months incarceration for attempting to export F–4 and F–14 jet parts to Iran. Kwonhwan 

Park, a Korean national, pled guilty in November to illegally exporting Black Hawk helicopter engines to China through a Malaysian front company. 

Month after month, publications such as TIME magazine and the 

Washington Times have run stories concerning the theft of critical 

American technologies by foreign nationals embedded at research 

facilities. 

Nationals of many nations come to the United States to engage 

in espionage. Our closest allies are not excluded from this list. 

However, all evidence indicates that certain nations are the most 

egregious violators. 

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There is no nation that engages in surreptitious illegal technology acquisition for purposes of both commercial piracy and military advancement on a scale that approaches that of the People’s 

Republic of China. 

The Wall Street Journal reported last month that thousands of 

Chinese military front companies are operating in the United 

States—some as contractors for the United States military—and 

that hundreds of thousands of Chinese tourists, business executives 

and students entered the United States last year. 

Many of these visitors, even when they are visiting for legitimate 

purposes, are tasked with obtaining whatever technological information they can. 

There are currently at least 115 students here from China, 

studying nuclear engineering, and thousands more studying computer, electrical, civil and chemical engineering. As an engineer 

myself, I must ask how can we be sure that they are not bringing 

back American technological secrets to their home country? 

And what about Iran, a country we suspect of endeavoring to 

make nuclear weapons? There are now at least four Iranian nationals actively studying nuclear engineering in the U.S., according to 

the Department of Homeland Security, as well as 350 electrical engineers, 12 biochemists and a host of other Iranian students studying in technical fields here. 

What is true of all these individuals is that they came to the 

United States after being approved for visas. They undergo Visa 

Mantis security checks which are designed to weed out those visa 

applicants likely to use these visits to the U.S. to acquire sensitive 

technology. 

However, the State Department’s focus over the last several 

years seems to have been devoted to reducing the inconvenience of 

the Visa Mantis security checks for visa applicants as much as possible and to be as generous as possible in the issuance of multipleentry visas. 

Now, we all want to facilitate the swift issuance of visas to legitimate applicants. But, I am concerned that we might not be paying 

adequate attention to the inherent security risks, that we may be 

being generous to a fault. At jeopardy are our military superiority 

and our economic competitiveness. 

Today we will ask a number of questions including: what can be 

done to enhance the existing security systems in place to track foreign nationals at our research facilities? Do background checks for 

visa applicants need to be improved? And should aliens suspected 

of being involved with piracy or illegal technology transfer be automatically ineligible for a visa to the United States? 

At this time I turn to my colleague, the Ranking Member from 

Texas, Ms. Jackson Lee, for purposes of making an opening statement. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman, I want 

first of all to associate myself with the intent of this hearing and 

what I believe the Chairman’s intent is and, of course, associating 

myself and joining him with that intent, the purpose of this hearing. That would be the legislative road map, the guidepost, if you 

will, to help us effectively become the America that we all know 

and have come to love; a country that respects both the investVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
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ment—both investment and, of course, the contributions that immigrants have made over the long history of this Nation. 

I have always begun these hearings over the last year that I 

have had the honor of serving my colleagues and the American people, saying that we are a nation of immigrants and a nation of 

laws, and of course, that immigrants do not equate to terrorists. 

So as we look to the witnesses who are before us, let me ask you 

to keep in mind that it would be, I believe, an impractical nonreality to suggest that we would close the door to all students, all 

researchers, and all nationals, international persons attempting to 

do business in the United States. 

The subject of this hearing is foreign nationals engaged in economic and military espionage. According to the National Counterintelligence Executive report to the Congress this year, individuals 

from almost 100 countries attempted to acquire sensitive United 

States technologies in fiscal year 2004. 

The report concludes that foreign access to sensitive information 

with both military and conventional applications has eroded the 

United States military advantage and the greater U.S. intelligence 

community’s ability to provide information to policymakers and undercut U.S. industry. It goes to my point that we must separate 

sort of the weak from whatever else is engaged. 

It is interesting that when all of us travel aboard—abroad on behalf of our respective Committees, particularly in this instance, the 

Homeland Security Committee that I am also on, are also interacting with heads of government who are thanking you for the opportunity of many of their own nationals to engage in training activities and opportunities—and research opportunities with those 

in the United States. 

You will constantly hear from your constituents, mostly in the 

medical and science professions, technology professions, the importance of the exchange and the ability to interact with those from 

other countries. This report states, however, that we are vulnerable 

to espionage because the United States has provided foreign entities with easy access to sophisticated American technologies. 

Many people thought that we were on the wrong side of the issue 

when many of our voices rose to oppose the sale of 

Unocal to a Chinese energy company. I happen to be one of 

those, and I come from what is called the energy capital of the 

world, but frankly I do believe there should be a fire wall in terms 

of important technology—and had the opportunity to speak to the 

head of China’s petroleum company at the time that the sale was 

being pulled, if you will, and indicated that we hope we have the 

opportunity to do other business efforts with that company, but 

there had to be a line in the sand on important technologies. 

New electronic devices have vastly simplified the illegal retrieval 

of storage information, of massive amounts of information, including trade secrets and proprietary data. Globalization has mixed foreign and American companies in ways that have made it difficult 

to protect the technologies that these firms develop or acquire, particularly when that technology is required for overseas operation. 

Mr. Chairman, I just a few days ago took my son back to college, 

interacted with a few college students for a couple of hours, not a 

whole day, but I was amazed with the level of sophistication and 

4

the eagerness to come back and use either the school’s technology 

or their own to develop new expertise—maybe something like what 

Bill Gates did a decade or more ago—dealing with now the new 

Microsoft, this new technology called Facebook, which the college 

students themselves designed. 

We know technologies are being fostered all over America, and 

the simplicity of being able to access some of our most delicate information is something we should be concerned about. 

Lastly, sophisticated information systems that transmit—store 

and transmit systems have become increasingly vulnerable to cyber 

attacks, an issue that my colleague Congresswoman Lofgren has 

been a leading force on. Apparently, the counterintelligence community is uncertain about exactly how much of its intelligence collection effort—some intelligence collection effort is directed by foreign governments and how much is carried out by private businessmen and women, academics or scientists, for purely commercial or 

scientific purposes. 

It is clear, however, that some foreign governments do employ 

state actors. This includes their intelligence services as well as 

commercial enterprises. 

Most of the foreign governments that are attempting to acquire 

American technology employ tools and techniques which are easy 

to use, inexpensive, low risk and sometimes legal. In most cases, 

foreign collectors simply ask for the information by e-mail, a phone 

call, a fax, a letter or in person. The report asserts further that increased demand for foreign labor in the United States, high-tech 

industries and the sharp rise in foreign investment in the United 

States over the past decade have given foreign governments increased access to American businesses and consequently to U.S. 

trade secrets. 

In addition, recognizing neutral benefits of an unhindered exchange of information, the United States has opened its military 

bases, national laboratories and private defense suppliers to foreign 

visitors. 

Mr. Chairman, I am going to ask that the entirety of this statement be submitted as I come to a close, and I ask unanimous consent that the rest of my statement be submitted into the record. 

Mr. HOSTETTLER. Without objection. 

Ms. JACKSON LEE. But let me conclude by saying, we know the 

problems, but we also know the value and the benefits that have 

been received by the American people that have been our longstanding commitment and our values to the opportunity of bringing 

those who are persecuted to the shores, but also those who have 

talent, who are contributors and those who just have brawn, who 

have literally built America. 

Let us not close the door to the opportunity of foreign students 

who—again, as I met with in meetings in China and elsewhere, 

who have learned both our democratic principles but also to share 

in technology and the ability to build systems that will benefit not 

China, not Germany, not the new Iraq, not South and Central 

America or the continent of Africa, but humanity. Let us not in our 

effort to avoid the transmittal of important technologies and important concepts here in America, not draw technology—draw legislation so restrictive, Mr. Chairman, that we cannot find a way to enVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
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sure that America benefits from the talent of this world. And let 

us make sure that the legislation is reflective of the security needs, 

but also the needs of the American people to be a friend to the 

world. And I yield back. 

Mr. HOSTETTLER. I thank the gentlelady. 

Do any other Members have opening statements? 

Ms. LOFGREN. Mr. Chairman, I will not take the full 5 minutes. 

Mr. HOSTETTLER. I recognize the gentlelady from California. 

Ms. LOFGREN. Clearly, every Member of Congress is interested, 

concerned and opposed to espionage in our country. So that is a 

given. The question is how to protect ourselves without doing damage to ourselves, and I think it is important to recall. I was in elementary school in 1957 when Sputnik went up, and we got a little 

wake-up call that the country was in trouble and we were in a 

huge competition with the Soviet Union, and we were behind. We 

pulled up our socks, and we ultimately won that competition. 

I think in a way we are in a similar spot today, the American 

Electronic Association used this phrase: It is the difference between 

then, which was throwing the frog in the boiling water; now the 

frog is in the water as it heats up, and a lot of Americans don’t 

realize that we are in this competition that is very serious in terms 

of science and technology and engineering talent. We have slipped 

in the number of engineering Ph.D.’s awarded in this country. We 

are falling behind; India and China and the EU are emerging as 

ever more vibrant competitors. 

The AEA—again, they just did a terrific report—cite the U.S. 

graduating 60,000 engineers a year, India graduating 82,000 engineers a year, and China graduating four times as many engineers 

a year as the United States. 

Now, the Ph.D. level—the National Academy of Sciences tells us 

that 65 percent of the Ph.D. candidates in engineering are foreign 

students, and many of them stay on and become Americans with 

us, and that benefits us greatly. In fact, I come from Silicon Valley, 

and about 40 percent of the start-ups in Silicon Valley are from 

people who were born someplace else and became Americans. 

And so we need to keep in mind that if we have to have strength 

in systems to make sure that we are protected, that we don’t end 

up shooting ourselves in the foot economically, and I would say also 

militarily, because the new Americans, the best and brightest, also 

help immensely in terms of the technology that ultimately is used, 

not just in the commercial world, but also in the defense effort. 

I hope that as we talk further about this, we can think about 

what systems we might put in place, smart systems, so that rather 

than creating bulky systems that have the result of deterring people we might want to have come in, and maybe not deterring the 

bad guys, we come up with streamlined systems that really target 

what we need in a way that is efficient and does not do damage. 

So that is what I am very interested in, and I yield back the balance of my time. 

Mr. HOSTETTLER. I thank the gentlelady. 

Without objection, all Members will have—will be allowed to 

have their opening statements be made a part of the record. 

Mr. HOSTETTLER. At this time, I would like to introduce Members of our panel. 

6

Michelle Van Cleave is the National Counterintelligence Executive and, as such, she is the country’s top counterintelligence official and is charged with integrating and providing strategic guidance for counterintelligence activities across Government. She reports directly to the Director of National Intelligence, John 

Negroponte, the President’s principal intelligence advisor. 

In the 105th Congress, Ms. Van Cleave was Chief Counsel for 

the Senate Judiciary Subcommittee on Technology, Terrorism and 

Government Information. 

In 1989, she served on the House Science Committee staff and 

was later Assistant Director in the White House Office of Science 

and Technology Policy. She has also held senior positions at the 

Department of Defense and is a graduate of the University of 

Southern California Law School. 

Dr. Larry Wortzel has been at the Heritage Foundation since 

1989 and has served as Asia Studies Director. He is a former Marine, Army Airborne Ranger and Army Colonel, and has worked for 

the Under Secretary of Defense for Policy to develop counterintelligence programs. In 1970, he served in the U.S. Army intercepting 

Chinese military communications in Vietnam and Laos. Later, his 

career took him to areas throughout Asia under U.S. Pacific Command and as U.S. Army Attache at U.S. Embassy Beijing during 

the Tiananmen massacre, and in 1995. 

Dr. Wortzel is the author of numerous books on Chinese military 

strategy and received his Ph.D. at the University of Hawaii. 

Mr. Maynard Anderson is President of Arcadia Group Worldwide, 

Incorporated. He has served in Government as Deputy Under Secretary of Defense for Security Policy with the responsibility of setting disclosure policy. In 1988, he served as Assistant Deputy 

Under Secretary of Counterintelligence of the Department of Defense, setting security policy and providing day-to-day oversight. 

Mr. Anderson also chaired the National Foreign Disclosure Policy 

Committee. Privately, he served as Chairman of the National Intellectual Property Law Institute Board of Directors. Mr. Anderson is 

a graduate of Luther College in Iowa and the Federal Executive Institute. 

William Wulf is President of the National Academy of Engineering and Vice Chair of the National Research Council. He is on 

leave from the University of Virginia, where he is AT&T Professor 

of Engineering and Applied Sciences. Mr. Wulf has served as Assistant Director of the National Science Foundation and Chief Executive Director of Tartan Laboratories, Inc., in Pittsburgh. He was 

also a Professor of Science at Carnegie Mellon University. He has 

authored more than 100 technical reports, has written three books 

and holds two U.S. patents. 

At this time, will the witnesses please rise to take the oath. 

[Witnesses sworn.] 

Mr. HOSTETTLER. Thank you. You may be seated. Please let the 

record show that each of the witnesses answered in the affirmative. 

Ms. Van Cleave, you are recognized for purposes of an opening 

statement. 

7

TESTIMONY OF THE HONORABLE MICHELLE VAN CLEAVE, NATIONAL COUNTERINTELLIGENCE EXECUTIVE, OFFICE OF 

THE DIRECTOR OF NATIONAL INTELLIGENCE 

Ms. VAN CLEAVE. Thank you, Mr. Chairman. I do have a prepared statement I would like to submit for the record. 

Mr. HOSTETTLER. Without objection. 

Ms. VAN CLEAVE. Please let me summarize a few points. 

I appreciate very much the opportunity to appear before you 

today to discuss foreign intelligence threats to U.S. national intelligence security and our economic well-being. 

Since some of the Members of the Subcommittee may not be familiar with my office, I would like to take a moment to describe 

my duties. In the post-Cold War world, the U.S. confronts intelligence challenges from a broad array of foreign nations. The singular global Soviet threat of decades gone by has been succeeded 

by a diverse set of adversaries, many of whom have become highly 

skilled in using their intelligence services, especially their human 

collectors, to acquire U.S. national security secrets. These include 

the technological and engineering secrets that give our Armed 

Forces the qualitative edge they may need to prevail in a dangerous world. 

While the threats against us are strategic, historically the U.S. 

counterintelligence community has not been organized or integrated to accomplish a national strategic mission. On the contrary, 

the various counterintelligence elements have long been part of a 

loose confederation of independent organizations with different jurisdictions and capabilities and no one in charge of the enterprise. 

CI operations and investigations have tended to focus on individual cases with little appreciation of synergy or their larger strategic implications. This structural flaw has undercut our ability to 

connect the dots of intelligence anomalies or effectively coordinate 

the different CI arms of our Government. To help remedy this situation, the Congress created the position of the National Counterintelligence Executive, or the NCIX. The law directs that the NCIX 

shall serve as the head of counterintelligence for the U.S. Government, subject to the direction and control of the Director of National Intelligence. 

I am the first NCIX appointed by the President. It is my job to 

provide strategic direction to our Nation’s counterintelligence efforts and to assure the integration of the disparate CI activities of 

our Government. It also includes the counterintelligence dimension 

to broad national security concerns such as the protection of our 

Nation’s critical technologies. 

The primary focus of counterintelligence is to defeat the efforts 

of foreign intelligence services to acquire U.S. national security secrets. It is also our job to supply CI insights and options to the 

President and his national security leadership. This includes supporting the overall national effort to stem the outflow of sensitive 

technologies, including export controls, diplomatic measures, controls on foreign investments in sensitive sectors of the U.S. economy and industrial security agreements. 

I want to emphasize that by far the vast majority of foreign acquisition of U.S. technology is open and lawful, as are the transactions of individuals and businesses involved in international comVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
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merce, as well as the free exchange of ideas in scientific and academic forums. But let me turn to the cases that fall outside the 

bounds of what is open and lawful. 

Last year, the counterintelligence community tracked efforts by 

foreign businessmen, scientists, academics, students and government entities from almost 100 countries to acquire sensitive U.S. 

technologies protected by export laws or other means. Of those, the 

top 10 countries accounted for about 60 percent of the suspicious 

foreign collection efforts against cleared defense contractors. Two of 

the countries that always rank near the top of the list are, of 

course, Russia and China, who have particularized interests, especially in dual-use technologies with military applications. 

But the top 10 also include some of our close allies, as you noted, 

Mr. Chairman. These allies may exploit their easy access to push 

the envelope into areas where they have not been invited. 

In the majority of cases, foreign collectors simply ask. By e-mail 

or phone calls or faxes or letters or in person they ask for the information or technology that they are interested in. Or they may exploit visits to U.S. businesses or military bases, national laboratories and private defense suppliers to extract protected information. 

U.S. businessmen and scientists and academics traveling abroad 

provide another valuable source of information for foreign countries, as do foreign students, scientists and other experts who to 

come to the U.S. to work or attend conferences. 

One indirect method used to acquire technology is for foreign 

firms to offer their services or technology, particularly IT-related 

support, to firms who have access to sensitive items. 

On this point, I should note that the use of cyber tools, as a collection technique, is of growing concern. As you know, cyber exploitation is inherently difficult to detect, as cyber intruders from one 

country will typically cover their tracks by mounting their attacks 

through compromised computers in other countries. 

Finally, state-directed espionage: State-directed espionage remains the central threat to our most sensitive national security 

technology secrets. 

While the Chinese, for example, are very aggressive in business 

and good at solicitation and good at positioning themselves for strategic investments, and they are adept at exploiting front companies, they also have very capable intelligence services that target 

U.S. national security secrets. As the Cox Commission report made 

clear over a decade ago, the Chinese did not acquire the most sensitive secret U.S. nuclear weapons designs by spending late nights 

at the library. 

It is one thing to describe these threats to you; it is quite another 

to describe what we need to do about them. We will never have 

leak-proof technology controls, just as we will never have enough 

security to protect us against all the threats all the time. Nor 

would we want to exchange the vast blessings of our free society 

for a security state. 

In my view, good security is not the answer alone. We also must 

have good counterintelligence, meaning that we must be more 

proactive in identifying, assessing and degrading foreign intelligence operations against us. We need to prioritize our efforts 

9

against the most serious threats to U.S. national security and our 

vital defense and foreign policy objectives. 

Now, in March of this year, President Bush approved the first 

national counterintelligence strategy of the United States, which I 

would like to submit for the record, if I may, Mr. Chairman. 

Mr. HOSTETTLER. Without objection. 

Ms. VAN CLEAVE. It is the first mission statement of counterintelligence as an instrument of U.S. national security policy. This 

is a very different concept of counterintelligence than the common 

perception of catching spies and putting them in jail. Counterintelligence encompasses all activities to identify, assess and degrade 

foreign intelligence threats to U.S. national security and our foreign policy objectives. And central to the President’s strategy is the 

call for U.S. counterintelligence to be proactive. 

Now, this Committee has jurisdiction over America’s single greatest resource for encountering intelligence threats, the Federal Bureau of Investigation. In the months to come, the FBI will be standing up a new national security branch that will span its responsibilities for counterterrorism, intelligence, and counterintelligence. 

Building on Director Mueller’s efforts to date, the full integration 

of these disciplines should enable the FBI to recruit, train and develop a new generation of agents and support personnel dedicated 

to its core national security mission. And more complete integration of the FBI with sister counterintelligence agencies will augment our nation’s ability to protect against the most serious foreign 

intelligence threats. 

In closing, Mr. Chairman, I would like to thank you very much 

for this timely hearing, and I welcome your questions. 

Mr. HOSTETTLER. Thank you, Ms. Van Cleave. 

[The prepared statement of Ms. Van Cleave follows:]

10

PREPARED STATEMENT OF THE HONORABLE MICHELLE VAN CLEAVE


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Mr. HOSTETTLER. Dr. Wortzel. 

TESTIMONY OF DR. LARRY WORTZEL, VISITING FELLOW,

THE HERITAGE FOUNDATION 

Mr. WORTZEL. Mr. Chairman, Members of the Committee, thank 

you for the opportunity to testify today on the theft of national security secrets and national security sensitive technology. I have a 

longer statement I would like to submit for the record, if I may. 

Mr. HOSTETTLER. Without objection. 

Mr. WORTZEL. I will focus on the intelligence collection posed by 

China. The manpower pool available to the Chinese Government 

and its intelligence services is nearly limitless, and it is impossible 

to know for certain if people are here to study for research or if 

they are here to steal our secrets. 

The People’s Republic of China is methodical in its program to 

gather information from abroad. In 1986, the People’s Republic of 

China launched a national high technology research and development program with the specific goal of benefiting China’s medium 

and long-term high technology development. 

This is a centralized program; it is known as the 863 Program 

for the date it was announced, and it allocates money to experts 

in China to acquire and develop things like biotechnology, space 

technology, laser technology, and advanced materials. Thousands of 

Chinese students and scientists were sent abroad by China over 

the years to pursue critical, civil and military dual-use technologies, and the practice still continues. Thus, the U.S. faces an 

organized program out of China that is designed to gather high 

technology information of military use. 

Now, today, inside China, there are entire high technology incubator zones that are designed to attract back students from the 

U.S. or U.S. businesses to bring technology in. It is very important 

to recognize that Chinese diplomatic missions abroad monitor the 

activities of their businessmen and students to cultivate informants, and before Chinese citizens get passports or travel permission, they are often interviewed by China’s intelligence security 

services and sensitized to intelligence collection requirements. 

I think it is important to remember that the constitution of the 

People’s Republic of China characterizes the state as a people’s 

democratic dictatorship. So it is pretty hard for legal travelers to 

simply turn down the Chinese Government in that authoritarian 

state when they get asked to cooperate. 

Now, we know from Chinese defectors and Chinese security officials, or diplomats in places like Australia and Canada recently, 

that this approach is used not only to collect intelligence in the 

United States, but also abroad. 

In 2003, the State Department approved some 700,000 visas for 

visitors from China to the United States. That includes about 

135,000 students. That is just a lot of folks. There were 40,000 immigrant visas granted to Chinese citizens in 2003. I have to say 

that these numbers make it impossible for the Federal Bureau of 

Investigation to vet every one of these people. There are some 

3,200 Chinese front companies operating in the United States. 

Now, the People’s Liberation Army of China went into the business of starting companies to bring in technology in the 1970’s, late 

20

1970’s and 1980’s. The General Equipment Department started 

Polytechnologies; the General Political Department, started Kaili or 

Kerry Corporation, Baoli, the logistics department started 

Xinshidai, or the New Era Corporation; and these are separate 

legal entities, not part of the military, but they were authorized to 

conduct these activities by the Central Military Commission of the 

Chinese Communist Party. 

They were originally manned by former officers of PLA or their 

families, in some case active officers, and they operated branches 

in the United States. They regularly brought delegations to the 

U.S. to bring in technology, and today they have turned into global 

conglomerates that have spawned some of those 3,200 companies 

that are operating in our country. 

So the Chief of FBI Counterintelligence Operations, David Szady, 

recently said that these companies are operating in such places as 

Milwaukee, Trenton, New Jersey, and Palo Alto. 

Now, I think that the Government, the U.S. Government security 

intelligence and law enforcement agencies have to focus on national 

security information. They ought to be looking for violations in the 

Arms Export Control Act, or the Export Administration Act, but 

when it comes to corporate or industrial espionage, proprietary secrets, that is not national security. 

It may be an economic problem for the United States, but I think 

that there the Government owes American companies a good legal 

infrastructure to protect patents, copyrights and trademarks; a system of education on industrial security here in our country; and a 

strong effort to ensure that China meets its own obligations to create a rule of law that protects the rights of ownership and intellectual property. But we shouldn’t cross over into losing—given the 

number of people, into losing our focus on national security. 

From the standpoint of congressional action, I would point out 

that the Export Administration Act expired in 2001; it was a 1979 

act. It needs to be revised to take account of the needs of 21st century technology. The Senate passed a revision in 2001; the House 

did not. I think the Executive Branch has to regularly review the 

Commodity Control List to ensure that appropriate national security controls on exports do not unduly restrict the ability of American industry to compete in the world market. 

Generally speaking, I think that technologies that are widely 

available in the world market and not unique to the United States 

should not be restricted and subject to export controls unless they 

can be multilateral controls. I would also recommend that visa officers get educated by the intelligence community so that things like 

the Visas Mantis program, and the technology alert list, can work 

effectively. They have a lot of prerogatives when they are out in the 

embassy. 

Let me close by saying that I don’t think it pays for us to be 

paranoid and suspect that every traveler, student and businessman 

from China, or woman from China, is a spy or is out to steal technology. Prudent law enforcement programs, counterintelligence 

programs, security education and industrial security programs are 

important ways to protect our Nation. But I would note that in 

places like Taiwan, the Republic of China and South Korea, it is 

these students that came out and learned and went back home that 

21

changed the political system there and created a rule of law and 

democracy, and that could someday happen in China. In the meantime, I do think we need to be vigilant. 

And I thank you for the opportunity to testify today. 

Mr. HOSTETTLER. Thank you, Dr. Wortzel. 

[The prepared statement of Dr. Wortzel follows:]

PREPARED STATEMENT OF LARRY M. WORTZEL

Mr. Chairman, Members of the Committee, 

Thank you for the opportunity to testify today on the theft of national security 

sensitive technology in the United States. As a former military intelligence officer 

who has tracked the activities of the People’s Liberation Army and Chinese intelligence services for 35 years, I know of no more pervasive and active intelligence 

threat to America’s national security than that posed by the People’s Republic of 

China. The manpower available to the Chinese government and its corporations to 

devote to gathering information in the United States is nearly limitless. There are 

some 300,000 visitors to the United States from China each year. It is impossible 

to know if these people are here for study and research or if there are here to steal 

our secrets. 

In 2003, for example, the State Department granted about 27,000 visas to Chinese ‘‘specialty workers,’’ the H1-B visa. Some of these were intra-company transfers 

coming to the United States from US firms operating in China. Indeed, between 

1993 and 2003 there were about 40,000 immigrant visas from China a year. The 

US government has handled about 2,410 asylum cases from China a year. In 2003, 

there were about 55,000 student visas granted to Chinese students. The sheer magnitude if these numbers presents a great challenge to the Federal Bureau of Investigation, particularly when the US is also concerned about terrorism. 

The General Political Department of the People’s Liberation Army has a proprietary company, Kaili, or Kerry Corporation, that operates in the U.S. as a real estate and investment company. The General Equipment Department of the PLA operates a proprietary company, Polytechnologies, which has offices here in the U.S. 

In addition, the Chinese Defense, Science, Technology and Industry Commission operate a proprietary called Xinshidai, or New Era, that has offices in our nation. 

These technically are independent legal entities, but they were established by the 

Central Military Commission of China to serve the interests of the military industrial complex. The PLA regularly operates trade fairs to attract American high technology into China. 

The Deputy Undersecretary of Defense for Technology Security and Counterproliferation has testified that there are between 2,000 and 3,000 Chinese front companies operating in the United States to gather secret or proprietary information, 

much of which is national security technology or information. 

The nature of the Chinese state complicates the problem of knowing what the 

large numbers of travelers and students from China are actually doing. China is 

still an authoritarian, one-party state led by the Chinese Communist Party with a 

pervasive intelligence and security apparatus. The Chinese government is able to 

identify potential collectors of information and, if necessary, to coerce them to carry 

out missions on behalf of the government because of the lack of civil liberties in 

China. Let me quote the first three sentences of Chapter 1, Article 1, of the Chinese 

Constitution: ‘‘The People’s Republic of China is a socialist state under the people’s democratic dictatorship led by the working class and based on the alliance of workers and peasants. The socialist system is the basic system of the People’s Republic 

of China. Disruption of the socialist system by any organization or individual is prohibited.’’

The People’s Republic of China is methodical in its programs to gather information from abroad. In March 1986, the PRC launched a national high technology research and development program with the specific goal of benefiting China’s medium and long-term high technology development. This centralized program, known 

as the ‘‘863 Program’’ for the date when it was announced, allocates money to experts in China to acquire and develop bio-technology, space technology, information 

technology, laser technology, automoation technology, energy technology and advanced materials. The 863 program was proposed by China’s strategic weapons scientists to emphasize strategic civil and military technology development. Thousands 

of students and scientists were sent abroad by China over the years to pursue critical civil and military, dual-use technologies. This practice still continues. When I 

was at the American Embassy in China and conducted due diligence checks to confirm the nature of Chinese companies seeking to do high technology business in the 

22

United States I most often found that the address identified for a company on a visa 

application turned out to be a People’s Liberation Army or PRC government defense 

research institute. Thus, the United States faces an organized program out of China 

that is designed to gather high technology information of military use. 

My colleague today, Mr Maynard Anderson, will discuss some of the ways that 

our government and industry can defend against intelligence gathering by China 

through defensive counterintelligence and security education programs. It is also 

important to know that we have other programs to screen out people coming to the 

United States to gather our trade or military secrets. In January 1998, the VISAS 

MANTIS program was developed to assist the American law enforcement and intelligence communities in securing U.S.-produced goods and information that are vulnerable to theft. Travelers are subject to a world-wide name-check and vetting procedure when they apply for visas. The security objectives of this program are to prevent the proliferation of weapons of mass destruction and missile delivery systems; 

to restrain the development of destabilizing conventional military capabilities in certain regions; to precent the transfer of arms and sensitive dual-use items to terrorists; and to maintain United States advantages in militarily critical technologies. 

This program operates effectively and can vet a Chinese student in as few as 13 

days. Non-students may take longer, as many as 56 days. However, I can tell you 

based on my trip to China two weeks ago that the American Embassy in Beijing 

and the Consulate in Guanzhou are able to process and vet in about two weeks 

visas for non-student travelers who fully and accurately outline the purpose and 

itinerary of their trip. The government also operates a ‘‘technology alert list’’ to 

identify legal travelers from China that may benefit from exposure to advanced U.S. 

technology with military application. 

Many provinces and municipalities in China now operate high technology zones 

and ‘‘incubator parks’’ specifically designed to attract back Chinese nationals who 

have studied or worked overseas in critical high technology areas. When students 

or entrpreneurs return with skills or knowledge that the central government deems 

critical they are given free office space in the parks, loans, financial aid, and administrative help in setting up a business designed to bring in foreign investment and 

technology. Their companies are given tax holidays. Innovative programs such as at 

Beijing’s Zhongguancun High Technology Park and Guangzhou’s High Technology 

Economic and Trade Zone get central government help. These are admirable programs that will develop entrpreneurial skills among well-educated Chinese citizens. 

However, as students and employees of U.S. companies return home, it is important 

to know that they are not taking back American economic or military secrets. Good 

counterintelligence and industrial security programs are very important to U.S. security given this threat. 

Mr. Chairman, the enforcement of intellectual property protection laws in China 

is spotty and inconsistent at best. This is one of the major complaints of American 

high technology companies about China’s compliance with its obligations under the 

World Trade Agreement. It will certainly be a subject discussed by President Bush 

and Chinese President Hu Jintao this week. The tendency to steal intellectual property and high technology secrets in China is worsened when ijntellectual property 

laws are not enforced there. And the problem is further exacerbated when centralized Chinese government programs, such as the ‘‘863 Program’’ I mentioned earlier 

in my testimony, are specifically designed to acquire foreign high techology with 

military application. This only creates a climate inside China that rewards stealing 

secrets. 

I believe that U.S. government security, intelligence and law enforcement agencies must focus on the national security. They should be looking for acts of espionage and for violations of the Arms Export Control Act or the Export Administration Act. When it comes to corporate or industrial espionage that is not a matter 

of national security, I believe that the government owes American companies a good 

legal infrastructure to protect trademarks, patents and copyrights; a system of education on industrial security; and a strong effort to ensure that China meets its own 

obligations to create a rule of law that protects the right of ownership and intellectual property. However, I do not believe that American intelligence or security agencies should focus on forms of economic espionage that do not involve national security information. From the standpoint of Congressional action, my view is that the 

Congress should reconsider the Export Administration Act with a view toward ensuring that its provisions meet the needs of 21st century technology. The 1979 Export Administrtion Act expired in 2001. The Senate passed a new Act in 2001, but 

no revision passed the House. And the Executive Branch must regularly review the 

Commodity Control List to ensure that appropriate national security controls on exports do unduly restrict the ability of American industry to compete in the world 

market. Generally, technologies that are widely available on the world market and 

23

not unique to the United States should not be unduly restricted unless they can be 

subject to mulitlateral controls. 

Finally, we cannot become paranoid and suspect that every traveler, student and 

businessman from China is a spy or is out to steal technology. Prudent law enforcement programs, counterintelligence programs, security education and industrial 

securty programs are important means to protect our nation. 

Thank you for your invitation to testify today.

Mr. HOSTETTLER. Mr. Anderson. 

TESTIMONY OF MAYNARD ANDERSON, PRESIDENT, ARCADIA 

GROUP WORLDWIDE, INC., AND FORMER DEPUTY UNDER 

SECRETARY OF DEFENSE FOR SECURITY POLICY 

Mr. ANDERSON. Thank you, Mr. Chairman. I too have submitted 

a statement for the record. With your permission, I will summarize. 

Mr. HOSTETTLER. Thank you. 

Mr. ANDERSON. Thank you, sir. 

We have proved that collectors representing foreign adversaries 

and friends use espionage, theft and other illegal means to take advantage of the United States and cause unauthorized disclosure of 

protected information. 

We also need to recognize that there are ethical failures of trusted personnel who are prepared to traffic in information and technology because they are greedy or because they are susceptible to 

foreign pressure, and they are threats as well. 

The United States is an open society and a prime target of collectors because it produces more intellectual property than any other 

nation in the world and does, to some extent, a poor job of protecting it. World changes, producing new alliances and new friendships internationally create more vulnerabilities to our technology. 

America may have won the Cold War, but we are losing ground 

economically to those who would pilfer our commercial secrets. 

National security and economic strength are indivisible, and the 

real test in this world of military and economic contests for supremacy may not be who first develops technology but rather who 

is the first to use it effectively. Technology’s application is the key, 

particularly in an area of dual-use technology. 

Integration of the management, protection and use of technology 

is an objective to ensure that we determine what needs to be controlled, what can be controlled, and employment of the most important control mechanisms. It is imperative that we determine accurately whether any other nation wants our technology and whether 

any other nation has it already, because we can’t afford to spend 

resources to protect things that don’t need protection. We need to 

balance the protection of real secrets while maintaining the competitive position of American industry in the world market. 

It would seem prudent, therefore, to use all current legal remedies available to enforce contracts and personnel actions, to enhance enforcement opportunities against current Government and 

contractor employees who break trust, to establish new standards 

and requirements for our foreign visitors, particularly students and 

researchers, and to ensure, probably most of all, that our citizens 

know what is expected of them. 

The easiest, least-expensive and most effective protection technique is education. All custodians of protected information should 

be subjected to continuing education concerning threats, 

24

vulnerabilities and protection of information so that they understand the consequences of its unauthorized disclosure, which are 

obviously jobs, loss of profits and diminished national security. 

Everyone should be made aware that national security is every 

citizen’s responsibility. 

Thank you, Mr. Chairman. 

Mr. HOSTETTLER. Thank you, Mr. Anderson. 

[The prepared statement of Mr. Anderson follows:]

25

PREPARED STATEMENT OF MAYNARD ANDERSON


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Mr. HOSTETTLER. Dr. Wulf. 

STATEMENT OF DR. WILLIAM A. WULF, PRESIDENT, NATIONAL 

ACADEMY OF ENGINEERING, THE NATIONAL ACADEMIES 

Mr. WULF. Thank you very much, Mr. Chairman, Members of the 

Committee. I too, like my predecessors here, have a longer statement, which I will submit for the record. 

I am pleased to come to the hearing today to remind all the 

Members of the Committee of the important contributions that foreign-born scientists and engineers have made and continue to 

make to this country. We are more prosperous and more secure in 

large part because of them. 

Before proceeding, while I don’t perhaps have the same credentials in intelligence that my predecessors on the panel have had, 

I would note that both my wife and I have been advisors to the Department of Defense for decades. We both carry Top Secret SCI 

clearances and my wife served for 5 years in the Pentagon as the 

Director of Research and Engineering, where she had responsibility 

for the oversight of all R&D in the Defense Department. 

I am convinced that security, real security, comes from a proper 

balance of keeping out those that would do us harm and welcoming 

those that would do us good. Throughout the last century, our 

greatest successes in creating both wealth and military ascendancy 

have been due in large part to the fact that we welcomed the best 

scientists and engineers from all over the world. No other country 

did that, and nowhere else has the genius for discovery and innovation flourished the way it has here. I am deeply concerned that our 

policy reactions to 9/11 have tipped the balance in a way that is 

not in the long-term interest of our Nation’s security. 

Fifty years ago, our scientific leaders came from Europe. There 

were the famous names like Einstein, Fermi and Teller, without 

whom we would not have been the first to have the atomic bomb; 

von Braun, without whom we would not be ascendant in rockets 

and space; von Neumann, without whom we would not be world 

leaders in computing and information technology. 

Today, it isn’t just Europeans that contribute to our prosperity 

and security. The names are those like Praveen Chaudhary, now 

Director of Brookhaven National Laboratory; C.N. Yang, now Nobel 

Laureate from the Institute for Advanced Study at Princeton; and 

Elias Zerhouni, who was born in Algeria and is now the Director 

of the National Institutes of Health. 

Between 1980 and 2000, the percentage of Ph.D. students and 

scientists and engineers employed in the United States, who were 

born abroad, increased from 24 to 37 percent. The current percentage of Ph.D. physicists is about 35 percent; for engineers, it is over 

50 percent. One-fourth of the engineering faculty at U.S. universities were born abroad; between 1990 and 2004, over one-third of 

the Nobel Prizes awarded to U.S. citizens were to foreign-born scientists. One-third of all U.S. Ph.D.’s in science and engineering are 

now awarded to foreign-born graduate students. 

We have been skimming the best and brightest minds from 

around the globe and prospering because of it. We need these new 

Americans even more now as other countries become more technologically capable. 

31

If I have one message to convey to this Committee today, it is 

that it is a serious mistake to think that all important defense 

technologies originate in the United States, and hence, the problem 

is to keep our technology from being stolen by others. 

We talk proudly about the MIT ‘‘Rad Lab’’ that developed radar 

during World War II, but the critical technology came from the 

United Kingdom. At the end of World War II we were a distant 

third in the development of jet engines behind both Germany and 

Russia—the Soviet Union. The World Wide Web was invented in 

Switzerland, not in the United States. I could go on and on. 

Many U.S. corporations are now shifting their development to 

overseas locations, research and development to overseas locations, 

not just because foreign labor is cheaper; that is a common and 

comfortable myth. It is frequently because the quality is better 

overseas. 

Again, real security depends upon a very careful balance, in this 

case, a balance of openness and secrecy. Walling ourselves off from 

others, from the otherwise open exchange of basic scientific information, is a recipe for being surprised and disadvantaged. 

To be sure, 9/11 and globalization have both changed the balance 

point. The balance point for the Cold War was a different one than 

for today. We need to fundamentally rethink our policies. However, 

in my opinion, several recent policy changes related to visas, to the 

treatment of international visitors, to this new issue of deemed exports and so on have had a chilling effect. 

It has already been mentioned that the applications of international students to attend U.S. colleges and universities has declined. Scientists have chosen to hold conferences in other countries. U.S. businesses have had to shift critical meetings to locations outside our borders. In the meantime, foreign companies, universities and governments are marketing themselves as friendlier 

places to do business or to get an education. In the race to attract 

top international talent, we are losing ground. 

At the same time, science and technology are growing rapidly in 

other parts of the world. Over 70 percent of the papers published 

by the American Physical Society’s world leading journal, The 

Physical Review, come from abroad—70 percent! We do not own all 

of the science and technology information in the world. It is illustrated by a figure in my written testimony, the number of first degrees in science and engineering awarded per year in Asia is now 

almost three times greater than in North America. 

Permit me to turn to this issue of export controls for a minute. 

They were instituted in 1949 to keep weapons technology out of the 

hands of potential adversaries. In 1994, the disclosure of information about a controlled technology to certain foreign nationals even 

in the United States has been ‘‘deemed’’ to be an export of that 

technology itself. And recent reports from the inspectors general of 

the U.S. Department of Commerce and State have suggested that 

the implementation of the rules governing deemed exports should 

be tightened. 

For example, they have suggested that the exemption for basic 

research should be altered and possibly eliminated and that the 

definition of access to controlled technology should be broadened. 

The university community is rightly concerned that a literal interVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
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pretation of the IG’s suggestions would essentially preclude foreign 

graduate students from participating in research and would require 

an impossibly complex system to enforce. 

Given that over 55 percent of the Ph.D. students in engineering 

in the United States are foreign born, the effect could be catastrophic. Either universities would have to exclude these students, 

or they would have to stop doing research on potentially defenserelated topics, which, of course, includes most of the fastest-moving 

new technologies. Neither of these alternatives strengthens the 

United States, they weaken it. 

One might ask if these policy changes will improve our security, 

I would point out that the United States is not the only researchcapable country. China and India, for example, have recognized the 

value of research universities to their economic development and 

are investing heavily in them. By putting up barriers to the exchange of information about basic research, we wall ourselves off 

from the results in these countries and slow our own progress. At 

the same time, the information we are ‘‘protecting’’ is often readily 

available from other sources. 

And finally, in a country with an estimated 10 million illegal 

aliens, one must wonder whether onerous visa policies or demeaning practices at border crossings will deter the committed trained 

spy or terrorist from entering the country. 

The 2001 Hart-Rudman Commission, which in February of 2001 

predicted a catastrophic terrorist attack on the United States, and 

which then proposed the Department of Homeland Security, said, 

and I quote, ‘‘The inadequacies of our system of research and education pose a greater threat to the United States national security 

over the next quarter century than any potential conventional war 

we might imagine.’’ Their essential point is that further damaging 

our system of research and education, including its relation to foreign-born scholars, is a very dangerous strategy. 

The United States still benefits from educating and employing a 

large fraction of the world’s best scientists and engineers. We have 

great research universities that remain attractive to the world’s 

best and brightest. We are envied for our non-hierarchical tradition 

that allows young scientists with new ideas to play leading roles 

in research. 

We have progressed because we fostered a tradition of free exchange of ideas and information and embraced a tradition of welcoming talented people from elsewhere in the world. But that advantage is eroding under current and proposed policies. 

The international image of the United States was one of a welcoming ‘‘land of opportunity.’’ We are in the process, however, of 

destroying that image, and replacing it with one of a xenophobic, 

hostile nation. We are in the process of making it more likely that 

the world’s best and brightest will take their talents elsewhere. 

The policies that superficially appear to make us more secure are, 

in fact, having precisely the opposite effect. 

Protecting Americans from threats must obviously be a high priority. But as I said earlier, real security will be achieved only by 

a proper balance of excluding those that would do us harm and 

welcoming those that would do us good by a proper balance of 

openness and secrecy. With selected, thoughtful changes to U.S. 

33

policies, we can achieve both goals, making our homeland safer and 

our economy stronger. 

I would like to close with another quote from the Hart-Rudman 

report, ‘‘Second only to a weapon of mass destruction detonated in 

an American city, we can think of nothing more dangerous than a 

failure to manage properly science, technology and education for 

the common good over the next quarter century.’’

Thank you for the opportunity to testify. 

Mr. HOSTETTLER. Thank you, Dr. Wulf. 

[The prepared statement of Mr. Wulf follows:]

34

PREPARED STATEMENT OF WILLIAM A. WULF


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Mr. HOSTETTLER. At this time we will turn to questions from 

Members of the Subcommittee. 

Ms. Van Cleave, about 30 percent of American university science 

and engineering faculty are foreign born, according to your testimony, 40 percent of Ph.D.’s in these fields go to foreign students. 

You also say that foreign intelligence services place senior scientists and exploit academic activities. 

Should there be better reporting of what projects these individuals are involved in; and in the case of students, also what subjects 

they are enrolled in, perhaps through an enhanced SEVIS system. 

Ms. VAN CLEAVE. Mr. Chairman, it would be extremely helpful 

to U.S. counterintelligence to have that kind of increased reporting 

on these individuals. 

Frankly, it is difficult to gainsay the statement that was just 

made by my fellow panel member here, that what we want to do 

is exclude those who would cause us harm and welcome those that 

would do us good. The trick is figuring out which is which. 

Mr. HOSTETTLER. It is possible that an individual from a country 

of concern, if they are applying for a degree in music education, for 

example, if they start taking nuclear engineering courses as electives, that it would probably be good to know that? 

Ms. VAN CLEAVE. It would be helpful to get the kind of reporting 

of changes in emphasis where students coming for one purpose 

then are switching their majors or emphasis to areas that might 

have national security implications. 

Mr. HOSTETTLER. But they don’t have to be major changes, I 

mean, if an individual takes, through the course of a 4-year degree, 

10 classes in chemical engineering, that doesn’t necessarily meet 

the requirements of a minor in chemical engineering, but it nonetheless will probably be very helpful in their potential work. 

Ms. VAN CLEAVE. Yes. 

Mr. HOSTETTLER. Thank you. 

Your testimony states that Chinese intelligence efforts exploit 

our open economic system to reduce the U.S. military advantage 

and undermine our economic competitiveness. It is actually about 

the only foreign country you have mentioned by name in your testimony. Knowing this, wouldn’t you agree that the Visas Mantis 

clearance needs better vetting by law enforcement agencies, certainly as it relates to a Chinese national coming to the U.S.? 

Ms. VAN CLEAVE. Yes, Mr. Chairman. I think that would be very 

helpful. I appreciate the opportunity that we had in closed session 

to discuss in more detail some of the reasons why. 

Mr. HOSTETTLER. In your testimony, you state that the top 10 

collectors probably accounted for 60 percent of foreign collection at 

defense contractors last year. Could you tell us what countries you 

are talking about when you talk about the top 10, maybe in the 

order of their collection? 

Ms. VAN CLEAVE. Mr. Chairman, we did have the opportunity to 

do that in closed session. I am reluctant to do that in open session. 

However, I am able to tell you some of the reasons why. 

A number of the countries that are on so-called ‘‘top 10’’ lists, 

there is not unanimity across the community about what countries 

really constitute the top 10. It depends on whether you are looking 

at incident reports of information that might be amalgamated by 

44

the defense security services, for example, or some of the case loads 

that the FBI might be reporting; and there is a different way of 

counting them, and so the top 10 may vary, depending on which 

source data we are looking at. 

But let me give you another reason why I am reluctant to go into 

certain specifics. 

Ms. VAN CLEAVE. Some of the Members some of the member 

States that are among the top 10 as I believe I mentioned are 

among some of our close allies, and there are many ways that we 

deal with these kinds of incidents different from calling them to the 

carpet in a public forum. There are different kinds of approaches 

that we might make to allies in trying to forestall this kind of activity. But the Committee can come to its own conclusion and speculation. Those countries that do have particular interests in military build up will themselves be looking for those technologies that 

can help assist in that military build up, and they will find in the 

United States a very rich environment in which to acquire those 

kinds of technologies. It is also the case that there is some measure 

of economic competition that drives technology acquisition where 

there is commercial advantage to be gained and a lot of money to 

be made that is yet another incentive, and so we see a great deal 

of activity to include many countries beyond just the top 10, but 

indeed at least a hundred nations. Nationals from a hundred different nations were recorded just last year in targeting U.S. technologies. 

Mr. HOSTETTLER. Ms. Van Cleave, I appreciate the point that you 

made with regard to our friends. Actually, in your oral testimony 

you did mention two of those nations, China and Russia. Our largest—well, I should say one of our largest trading partners—we 

have ongoing evolving relations with Russia. The reason why I 

asked the question is the exact reason you gave why you say you 

are reluctant to give us that, and that is, there is an assumption 

among many of our constituents, many of our citizens of the United 

States that our friends don’t spy against us. But as you mentioned, 

in general, that is a very erroneous assumption to be made. And 

the reason why I asked you that question is to put on the record 

very specifically who those people are because, once again, it’s important for us to know that, for example, through the Visa Waiver 

Program, and through other programs that don’t take advantage of 

the Visa Mantis system, that there may be requirements for us to 

change the law with regard to our friends. And I mean, I don’t 

mean that with quotation marks. I mean friends but that have reasons that may be confusing to a lot of us and would be very confusing to a lot of my constituents as to why they aggressively commit espionage against the United States. And so I will not press 

you on the issue, but I will simply, once again, reiterate that it’s 

important for us to, in open session, if it is not classified, to divulge 

this information really for the benefit of this Committee and the 

benefit of our constituents. 

Dr. Wortzel, your testimony states that tens of thousands of student visas were given to Chinese nationals last year; in fact, one 

of the highest. Do you believe we’re giving preference to China in 

these student visa numbers over our allies, over some of our allies? 

45

Mr. WORTZEL. I don’t think it’s a definite preference toward 

China. I think what you’re seeing, first of all, 1.3 billion people 

there, there’s going to be more students trying to get out. We’re obviously a very attractive place to get an education, whether it’s a 

high technology education or an education out in the social 

sciences. I think our programs are actually pretty restrictive. It’s 

difficult to go into an American Embassy and get into the United 

States if you’re in China. So I think we have to deal with the fact 

that there are just huge numbers of people there. India, only second to that, and that probably accounts for the numbers. 

Mr. HOSTETTLER. Do you believe an enhanced SEVIS system 

would allow us to gain better information to provide our intelligence community the information they need to——

Mr. WORTZEL. I do. I’m a great advocate of data mining. I think 

that the ability to electronically sort through what is open-source 

data, who’s here, what are they doing, whether that’s by someone 

in immigration—they’ve got a right to know what somebody’s doing 

at a university. Now, one can argue that a U.S. intelligence service 

getting that information might be objectionable to a university 

president. But if the immigration service gave somebody a visa, I 

think it’d be great to allow them, allow Customs to get in, or Immigration, I’m sorry, to get in and say, okay, we gave Joe Doe a visa, 

and he said he was coming here to study this. Let me see what he’s 

studying. And those are things that can be done quickly, electronically, and things can be sorted out. I do think we should be approaching it that way, and I think that we have appropriate agencies in the Government that could look at that, and then if there’s 

a reason to raise concerns about what’s going on, they turn it over 

to another agency or counter-intelligence agency. 

Mr. HOSTETTLER. Very good. Without objection, I will grant the 

Chair an additional minute to ask one additional question of Dr. 

Wulf, maybe a couple of questions actually. Very short answers. 

You might not have the information. Dr. Wulf, could you tell me, 

given the fact that Master’s and Ph.D. slots for engineering are 

limited in the United States, would you have statistics that tell us 

the number of American citizens who are denied Master’s applications, who have Master’s applications denied, as well as Ph.D. applications denied in the United States? Would you happen to have 

those? 

Mr. WULF. Approximately zero. 

Mr. HOSTETTLER. So it’s really unlimited—the number of Master’s and Ph.D. slots? 

Mr. WULF. I didn’t quite say that. But the number of Americans 

who do not enter graduate programs because there’s no space is essentially zero. 

Mr. HOSTETTLER. Okay. 

Mr. WULF. The trouble is they’re not applying. 

Mr. HOSTETTLER. So there are zero denied. 

Mr. WULF. Yeah. Approximately zero. I mean, there may be some 

oddball cases I don’t know about. 

Mr. HOSTETTLER. Thank you very much. 

The Chair recognizes the gentlewoman from Texas, Ms. Jackson 

Lee. 

46

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. Your 

initial round of questioning certainly points to a dilemma which we 

face. I’d like to take some remarks that were made generally 

speaking through the testimony presented in the open session to 

indicate my agreement. Let me first of all thank Congresswoman 

Lofgren for recognizing Dr. Wulf and the astuteness in which she 

recognized you in as much as you are representing or certainly associated with the University of Virginia, and I couldn’t think of a 

better school. I happen to be an alumnus. So I thank the Congresswoman very much for her astuteness, Dr. Wulf, and I thank you 

for your service, as well as I do the other panel members. 

But you did highlight for us the fact that we do prosper because 

we skim the best scientists from around the world. At the same 

time, I think interwoven into your remarks is the idea that we suffer as well from enticing students and graduate students into the 

sciences and other high technologies that are necessary. So I’m 

going to come to you and pose that question. But I do want to go 

to Ms. Van Cleave to ask, what is the extent that she feels that 

we are now able, the United States, your industry—your, in terms 

of counter intelligence—able to identify, right now, foreign nationals who are coming into the United States to engage in espionage? 

Do we have that capacity? 

Ms. VAN CLEAVE. We have limited insight into the foreign intelligence operations into the United States, which is to say, to the 

extent that we understand the character, make-up and operations 

of foreign intelligence services of concern, we can identify individuals that might be sent here for those particular purposes. However, much of the intelligence collection against the U.S. technology 

base is carried out not by known intelligence officers but rather by 

those who are employing nontraditional collection means against 

us. And that is a much much more difficult problem. 

There I would have to say that we have precious little understanding or way of knowing when individuals who ostensibly are 

coming here for legitimate business purposes might, in fact, have 

more troubling objectives in mind. 

Ms. JACKSON LEE. So, in essence, part of the road map that 

you’re providing for us today is the heaping up, if you will, of resources to look at that component that would be nontraditional in 

the way that they would seek to secure information. That seems to 

be where we need some emphasis. 

Ms. VAN CLEAVE. Yes. We’re very much in need of tools that 

would enable us to be able to characterize who those people are 

and why they are here, that small slice that is here for illegitimate 

purposes. 

Ms. JACKSON LEE. I thank you. 

Dr. Wortzel, I likewise had some agreement with some of the remarks that you have made. But let me just say, and I believe that 

we will wind up on the same page. We know that, as I started out 

by saying, the importance of the intellectual exchange and the benefits that the United States has gained by a vast number of individuals. And we also know, without any naming or, if you will, illuminating any closed sessions, we know that even our allies have 

been found to be engaged in some activities that we would not support. So I don’t want this to be a hearing that stigmatizes the enVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
47

tire student body from China. They our allies and friends. We have 

engaged in some very positive exchange opportunities, both in 

terms of our student exchange but also our trade exchange. And 

frankly, we are working toward a diplomatic relationship in terms 

of their continuing improvement. And I might add, we certainly 

want to ensure that our military operations are more in sync than 

in conflict. But you did mention, and I was trying to find your 

quote, but let me just say this: I look at it that the overall war on 

terrorism has taken us away from—and don’t want to suggest that 

we should diminish that effort, but we need to increase, if you will, 

the resources for the rest of the intelligence community. Why don’t 

you comment on where we need to, if you will, lift that issue up? 

And in the meantime, I’ll be finding one of the quotes that I agree 

with you on. And I guess it is the point that you made about our 

work should be—that ties into my question—national security, 

versus the question that many Members—rightly so, because their 

constituents are impacted by this whole economic issue. If you go 

to China, you’re inevitably talking about CDs and country western 

music and other music that they have obviously utilized. But that’s 

economic. And I think you said something about, we should be focusing on national security. Can you share that with me? 

Mr. WORTZEL. Well, I think we should—thank you, Congresswoman. We should focus on national security. We need to provide, 

as I said in the testimony, the legal structure here in the United 

States, and we need to foster a legal structure in China that will 

provide for property rights and intellectual property rights. But we 

need to worry about national security here. And I think that’s the 

critical task. Refining the lists of controlled commodities, dual-use 

items, to ensure that we protect what is really unique to the 

United States. I mean, there are some things we’re just way ahead 

on that nobody else is doing, composites that make stealth technologies, turbine and in jet engine technology. Nobody else does 

this. We need to think about that. I would argue generally that 

basic research in universities has got to be open, wide open, but 

that when the Department of Defense or the Department of Energy 

goes to a specific university and funds a program that moves into 

applied research, then we should be able to know who’s working on 

it and what they’re working on and why they’re there. So I 

wouldn’t worry, Mr. Chairman, about somebody taking 10 courses 

in chemistry, advanced chemistry. But if he or she is working to 

do research on an applied technology with military application or 

with application for weapons, I’d get really nervous about it. And 

I would want to be able to know that. 

Ms. JACKSON LEE. Mr. Chairman, Dr. Wulf, if he might respond 

to the question I raised. Dr. Wulf, that was the question dealing 

with—I started out the whole question dealing with the importance 

of the talent that comes here to the United States and the lack of 

U.S. Citizens engaged in the sciences. 

Mr. HOSTETTLER. No objection. The gentleman will be allowed to 

respond. 

Ms. JACKSON LEE. I thank the Chairman, and I’ll conclude with 

that. 

Mr. WULF. As I said in my oral testimony, and it appears again 

in my written testimony, foreign-born nationals represent an enorVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
48

mous fraction of the science and engineering talent in this country. 

I tried to give some examples. The fact that somewhere between 25 

and 30 percent of the faculty in engineering schools are foreignborn, the fact that overall, something like 37 percent of all of the 

engineers and scientists in the United States are foreign-born, the 

fact that a third of the Nobel Prizes awarded in the last 10 or 15 

years to U.S. Citizens were to foreign-born. It’s just really hard to 

overstate the benefits that we have reaped by skimming off the 

best and brightest minds from around the world. And we are, in 

my opinion, in serious danger of creating an atmosphere that those 

people will not want to put up with. 

Ms. Van Cleave made reference to the fact that, in the fifties, a 

number of Chinese returned to mainland China and set up their 

missile program. I would recommend to any Member of the Committee that feels like exploring that, that they take a look at a book 

called, The Thread of the Silk Worm, about the man who headed 

the Chinese missile program, named Tsien Hsue-shen. He was a 

professor at Cal Tech, got his Ph.D. at MIT, was one of the leading 

rocket scientists, literally, in the United States, and quite improperly and erroneously, got caught up in the McCarthy hearings, was 

held in house arrest for, if I remember correctly, 2 years and, finally, in disgust returned to China and created the Chinese missile 

program. Yes, it was a returned Chinese. But we drove him there. 

Mr. HOSTETTLER. Will the gentleman concede the fact that it was 

the Communist Chinese missile program? 

Mr. WULF. Oh, yes. Absolutely. 

Mr. HOSTETTLER. The Chair now recognizes, without objection, 

the gentleman from Texas for questions, 5 minutes. 

Mr. GOHMERT. Thank you. Appreciate my colleague allowing me 

to proceed. 

I’m going to ask each of you to name the top two immigration 

practices or omissions that you believe are the biggest threat to our 

national security. But while you’re thinking about that, I want to 

ask Ms. Van Cleave, are you familiar with the diversity visa program where we provide 50,000 visas a year on the basis of a lottery? Are you familiar with that program? 

Ms. VAN CLEAVE. Congressman, I have to say, no, I’m not. 

Mr. GOHMERT. Okay. Well, then I don’t guess you can tell me 

how many terrorists may have utilized that program. But anyway, 

I would suggest that you take a look at it. Some of us, we voted 

that out of this Subcommittee, a repeal of that, because it seemed 

ludicrous to some of us that we be awarding visas on the basis of 

a lottery, allowing immigration to abdicate their responsibilities. 

That’s a concern of some of ours. But let me start with Dr. Wulf 

and work our way down to my left. Doctor, what do you see as the 

two biggest, two immigration practices or omissions that are the 

biggest threat to our national security? 

Mr. WULF. Two? That’s not easy. But the first one I would name 

is the fact that immigration visas are not awarded particularly on 

the basis of the contribution which the individual will make to the 

country. They are more typically family based or that sort of thing. 

I think we ought to give special consideration to those people who 

can really contribute to the country. And I have to say, the second 

49

one is overreaction. I really am concerned that we’re in the process 

of making things worse rather than better by overreacting. 

Mr. GOHMERT. Thank you. 

Mr. Anderson. 

Mr. ANDERSON. Yes, sir. I think perhaps the most important one 

to me is that we don’t know who is arriving here. We do a lot of 

sort of superficial work, but we’re rather poor in determining just 

exactly who’s coming. And I don’t mean to—I don’t mean for that 

to sound discriminatory. But we don’t ask those folks, for example, 

students and researchers coming in, we don’t ask those folks to 

provide us with a great deal of information about who they really 

are. We ask it of our own students. We ask it of our own military 

personnel. We ask it of all kinds of people in the United States, but 

immigrants really are not subjected to very strenuous questions on 

who they are really. And I think that may be, to my mind, the 

greatest one. I’m not sure that—I’m not sure that I could name a 

second one. I don’t like quotas. I don’t think quotas are good. I 

don’t know that that’s a—I don’t know that that’s a threat to us. 

But I think a failure to really identify our immigrants is a major 

issue. 

Mr. GOHMERT. Okay. Thank you. 

Ms. Van Cleave. 

Ms. VAN CLEAVE. From the perspective of counter intelligence, 

immigration laws are very clear: where we have an individual who 

may be known or expected to engage in intelligence activities and 

activities inconsistent with U.S. laws, visas are denied. But my real 

concern about immigration laws is that, from a CI perspective, they 

really can’t do a great deal for us beyond that. I mean, there isn’t 

a panacea that enables or immigration laws to protect us against 

all of the things that this hearing has now convened to discuss. I 

would have to say that getting at the real question of who these 

people are who are coming into the United States, immigration 

laws can do, can provide some of that information to us. But that 

really is the point where I think that we need to have a layered 

approach of which immigration controls are only one part. The 

matter that was mentioned a little earlier by the Chairman——

Mr. GOHMERT. Can you help me? Maybe my mind’s eye is too 

simplistic. I’m just asking you, what do you see as the biggest 

threat to national security? And from a counter intelligence—you’re 

saying we need a layered approach. 

Ms. VAN CLEAVE. Because, sir, I know——

Mr. GOHMERT. So the biggest threat in your mind is that we 

don’t have a layered approach? 

Ms. VAN CLEAVE. I know that foreign intelligence services and 

foreign governments will exploit such loopholes as they can find to 

send personnel here to achieve certain ends. 

Mr. GOHMERT. Bingo. That’s what I’m looking for. What loopholes do you know of that we can fix? Number one problem. Number two problem. 

Ms. VAN CLEAVE. And I believe in closed session I was asked to 

take, for the record, that particular question and to provide a detailed answer back to the Members of the Committee. But in open 

session, let me say that I am concerned that, where there is an opportunity that immigration laws present for foreign nationals to 

50

enter here because they present themselves as residents of another 

country, and we really don’t get true disclosure on who they are 

and where they really come from, then that is one particular type 

of a loophole that I think that this Committee may want to consider closing as it is reviewing our immigration laws. 

Mr. GOHMERT. So we don’t get sufficient information on where 

this individual is actually coming from. Is that correct? 

Ms. VAN CLEAVE. In certain instances, that is correct. 

Mr. GOHMERT. Number one. I wasn’t asking anything classified. 

Just a succinct, what do you say, number one problem, number two 

problem, and then we can go to work from there. We can get classified information. We can go beyond. But okay, so that’s the number 

one problem. Sufficient information on where they’re from. What 

else? 

Ms. VAN CLEAVE. With respect to other aspects of our immigration laws, I have to tell you, if it isn’t obvious already, that I am 

not an expert in U.S. immigration laws. 

Mr. GOHMERT. You’re hopefully an expert on counter terrorism or 

counter intelligence. 

Ms. VAN CLEAVE. Yes, sir. That’s correct. That is correct. And 

being able to avail ourselves of different kinds of databases and information insights on persons who are coming into the United 

States in various categories of immigration visas is very valuable 

to U.S. intelligence. And to the extent that we can have more robust databases on persons who are coming here and what they do 

while they are here, it is of help to us very much. 

Mr. GOHMERT. And I apologize to you if you felt like I was trying 

to make you into an expert on immigration. And I apologize if I 

presumed too much in thinking that someone in counter intelligence might overlap or bump into areas of immigration policy 

where a light would go off and you say, oh, that’s bad for our country that we have this policy. It bumps up against everything we 

know to be true and good as counter intelligence. Some of us may 

individually be counter intelligent. But anyway, Dr. Wortzel, if you 

would, very quickly. My time is up. 

Mr. WORTZEL. I think that the Technology Alert List and the 

Visa Mantis program as a process is a good idea. I think it can be 

improved by education for the officers that actually stand the visa 

line. And my own experience in embassies is that, when you have 

an ambassador that insists on interdepartmental cooperation and 

screening of visa applications, you end up with better educated selections of who’s getting a visa and who’s getting denied. So I 

would improve that. It’s something I think we’re doing well. I think 

one of the greatest threats is that when we make it too difficult for 

an American company to bring in an intra-company transfer, either 

to do work in the United States, or for a corporate education program, we force that company to export its entire R&D effort to a 

third country or to China, a place like China. So I think we have 

to be very careful about this balance of what I just advocated in 

Visa Mantis and Technology Alert Lists and ensuring that when a 

company has a legitimate need for some foreign expert to come in 

here and get educated or do research and go home and manage or 

to work here, we don’t force that company to export our R&D capability outside of United States. 

51

Now, Mr. Chairman, I failed to respond to one part of Ms. Jackson Lee’s question. And if you would indulge me, I could do that 

in a minute. 

Mr. HOSTETTLER. Without objection. 

Mr. WORTZEL. Certainly. She asked about the balance between 

counter intelligence responsibilities and antiterrorism investigative 

responsibilities for the FBI. And let me say that my experience before and after September 11, 2001, in having to deal with FBI 

agents here in this country that you know I may have spoken to 

or may come to interview me is they’re doing a pretty good job. I 

mean, these—they are able, despite the fact that they’re out hunting terrorists and hunting people that are perhaps dealing in weapons of mass destruction, they’re still able to focus on the big ball 

park issues that deal with what may be Chinese espionage, so that 

their people can use more reinforcement. I think they need more 

counter intelligence agents in the field. They can use more education. I find myself talking to FBI counter intelligence agents that 

don’t know the history of espionage with China, and you know I’m 

going back over the fact that I’m a little older, and I’ve been part 

of it. But basically, I’m pretty happy with what they’re doing as an 

agency, and I support the changes in the creation of a new division. 

Mr. HOSTETTLER. Thank you. 

The Chair recognizes the gentlewoman from California for 5 minutes, Ms. Lofgren. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

I want to focus a little bit on the Visa Mantis process because 

it is bulky and it is slow and it’s causing us problems. And I’d ask 

unanimous consent to enter into the record an article from the New 

York Times this August that talks about a Ms. Wang, who is a 

cryptographer, mathematician actually, who was one of nine 

invitees to a conference on cryptography that was going to help the 

United States because they found a flaw, and they were going to 

help us. And they were not able actually to get in to provide that 

help. 

Mr. HOSTETTLER. No objection. 

Ms. LOFGREN. I’ll just note also, last spring, I met with, I won’t 

mention his name but a Nobel Prize winner in California, who told 

me that he will no longer organize scientific conferences in the 

United States because you can’t get the scientists in. And so I’ve 

actually, since he said that I’ve been looking at all the high energy 

physics, it’s all, it’s in Toronto, it’s in Europe. They’re not here anymore. And so we’re going to pay a price for that. The Visa Mantis, 

stepping back, I think someone said we need to take a look at our 

export control system. And I do—we’ve tried to do that. We lost a 

vote on the floor here. Secretary of State Rice suggests we ditch the 

MTOP standard—it doesn’t work—and to go with a standard of 

what’s readily available, which makes a lot of sense to many of us. 

If we were to do that, here’s the question: Wouldn’t that help on 

the Visa Mantis project? Because then you would have a much limited set of technologies, and you would be protecting it against the 

things you really needed to protect, instead of this broad area of 

when you go to Fry’s Electronics and buy it, and if you can buy it 

at Fry’s, it’s too late. And then, wouldn’t that also help on the 

deemed export problem? Because right now, we are controlling on 

52

things that—I mean these students are just going to go and get the 

same thing at Oxford, or you know, it’s not as if we’re the only people that are studying this. What is your reaction on that approach 

as part of the way to fix the Visa Mantis problem? 

Mr. WORTZEL. First of all, on MTOPS, I would drop that, too. I 

think it’s kind of silly to begin control and speed—I think you have 

to begin to figure out if there are certain software applications that 

have great military or cryptographic application that you control. 

And I think it’s getting silly to control MTOPS, and I think it’s getting silly to control chip fencing, whether it’s five or 13 microns or 

whatever. Now, all these questions that you’re asking really also 

come down to questions on deemed exports. And well, let me give 

you an example. You can study this stuff. I’m a political scientist. 

I’m a military officer. You know, I have done a little bit of intelligence work here and there. I’m not an engineer, and I never 

worked in production. And frankly, most consular officers on a visa 

line have not either. 

Ms. LOFGREN. They don’t know. 

Mr. WORTZEL. They don’t know. So their education is a very important part of it. And here, if you’re working in an embassy, if you 

have got a good ambassador or consul general he’s putting those 

people in touch with the industry people. 

Ms. LOFGREN. Let me just—I know I’m going to run out of time. 

I don’t want to be rude. But right now, we have the responsibility; 

the State Department with Commerce does this whole list. Just 

simply by shrinking the list we would help the situation to target, 

it seems. Would you agree Dr. Wulf? 

Mr. WULF. As long as you shrink it by making it more specific. 

Part of the real problem is here it’s a long list or its two long lists, 

and each item on the list is quite generic. So you hand this to some 

poor consular official who doesn’t have a technical background, and 

they—— Ms. LOFGREN. Yes it is always easier to say no. You don’t get 

called to account for saying no. Only for saying yes. 

Mr. WULF. Right. 

Ms. LOFGREN. The other thing I had, looking at it, the slowest 

part of the whole Visa Mantis program is the FBI. They don’t have 

a deadline. And I’ve often wondered, how much do they really have 

to do? I mean, these are foreign nationals. They haven’t in most 

cases been to the U.S.; they’re not permanent residents. They don’t 

live here. You know, maybe the CIA might have something on 

them, in which case we should get that information. But they’re 

not going to be on a rap sheet in the FBI’s computer. I mean, it 

just seems to me that if you’re paying a price by having the top 

scientists go to other countries, having your scientific conferences 

be shoved abroad, or I’ll tell you, as I was driving to the airport 

in California, I heard an interview of one of my constituents who 

had a huge telephone network system that he had sold to a company abroad. He couldn’t get his customer in to teach them how 

to use the system, so he relocated his company to Vancouver and 

left California. So there’s a price to be paid on all of this. What are 

we getting for it in terms of security? 

Mr. WORTZEL. Well, first of all, I don’t think it’s wrong to ask 

universities and companies to plan ahead and figure out who 

53

they’re going to invite. So a few months advance notice, you know, 

if you decide tomorrow morning you’re going to run a conference 

and you want somebody—— Ms. LOFGREN. Right. No. I don’t disagree with that. 

Mr. WORTZEL. With respect to—I wouldn’t eliminate any part of 

our intelligence or law enforcement community. But I do think that 

of all the agencies, from what I have seen and read and experienced, that’s the one that can profit the most by a systematic automation of the records. 

Ms. LOFGREN. Well, it’s paper records, and that’s why it takes so 

long. I mean, it’s pretty shocking that they’ve still got paper. 

Mr. WORTZEL. So I wouldn’t eliminate it. Instead, I mean, you 

have oversight. That’s where I would push for. 

Ms. LOFGREN. We’ve yet to have a hearing on oversight of the 

FBI in the Full Committee in the 10 years I’ve been on the Judiciary Committee. I would just close. I know my time is up. We talked 

about our competitiveness. But if 2 percent of the population of 

China is really, really smart, that’s more than the entire population of the United States. So that’s what we’re competing against, 

and we’d better make sure that we’ve got new Americans to do 

that. And I yield back. 

Mr. HOSTETTLER. I thank the gentlewoman. The Chair recognize 

the gentleman from Iowa, Mr. King, for 5 minutes. 

Mr. KING. Thank you, Mr. Chairman. 

I regret that I had to step out of this hearing for a period of time, 

and I missed some of the core of the testimony of the witnesses. 

I thank you all for your testimony and your written testimony. I 

have absorbed some of this testimony when the doors were closed 

and some of it when it’s open. And I look back at the United States 

of America in 1959, and I remember sitting in the sixth grade 

when Sputnik went up into space. I didn’t know at that day, but 

I found out over the years that I had been assigned to, and millions 

of American students had been assigned to, go down the path of 

science and technology and engineering and math and chemistry. 

And it was, we did an all out full court press. We mobilized America to educate our young people so that we could prevail in the race 

to space, and in the process of doing so, we also, I believe, laid the 

groundwork to prevail in the Cold War by succeeding economically 

where the Soviet Union was bankrupted and before they checkmated us militarily, by the way. And that backdrop of the history 

of what we did in this country to mobilize a nation of essentially 

U.S. citizen students that went into the science and technology was 

the pattern that we had in the past. And I would ask, to what level 

we have a truly, an intellectual exchange when we have, I think, 

far more students here in the United States studying science and 

technology than are studying in foreign countries? Is it an exchange, or is it just a transfer of our science and technology to foreign countries? And then, so then I began to think in terms of 

what’s ahead of the next generation of America if we’re watching 

these numbers grow. And as Dr. Wulf has testified, 25 to 30 percent of the engineering faculty is foreign-born; 37 percent of the engineering degrees are foreign-born; one third of the Nobel prizes 

are foreign-born. If that number is growing, and I suspect it may 

be, because more than 50 percent of the engineering doctorates are 

54

foreign-born. So are we, do we have an intellectual transfer here, 

or are we just slowly transferring our intellectual property and our 

human property to foreign countries? A generation from now, are 

they going to need our universities to teach this, or are they going 

to have then established in place an ability to teach that engineering? Are we going to send our students there at some point? At 

what point do we reach that critical mass, that tipping point where 

they’re not coming to the United States, not because we haven’t set 

a climate that says, please come here and learn, but because they 

have now absorbed the science and technology necessary for them 

to be the world leaders? And if we’re looking at a nation like China, 

for example, that has 1.3 billion people and the ability to mobilize 

all of them if they choose or skim the cream off of the crop, get that 

education, bring them back home again, have we already marketed 

some of America’s future? And what if—and so within the context 

of that, that generational, what happens in 25 years or 30 or 50 

years? I inject another question. And that is, are the Israelis educating Palestinians or Arabs in military or nuclear technology or 

missile technology? Do they have an exchange program going on 

with their neighbors, their people that are sworn to kill them and 

drive them into the sea? I mean, that’s a little microcosm possibly 

of this, I’ll say, the risk of an impending crisis with China and a 

generation from now. So if the Israelis see the wisdom in not doing 

that with their neighbors sworn to their annihilation—and I remember the Chinese general that threatened to nuke Los Angeles. 

And I wish Mr. Gohmert were here, because he had a conversation 

with their leadership over there last month to point that out. I pose 

then my question to Mr. Wortzel. Are we thinking generationally 

in this? And what would happen to the future of this country if we 

decided that we didn’t want to take a security risk or intellectual 

property risk and wanted to mobilize the young people in this country like we did after Sputnik? 

Mr. WORTZEL. Well, I would like very much to see scholarships 

targeted toward American students rather than bringing foreign 

students into American universities. Particularly when you’re dealing with a country that has 790 something—or $43 billion in foreign reserves. They can afford to send their own students to American universities. But frankly, I would not keep them out. We do 

not know the ultimate result of our engagement policy with the 

People’s Republic of China. It is a latent security threat, and it is 

certainly a real threat in the sense of its strategic nuclear forces 

programs not so much in its conventional forces. But I will tell you 

that there’s great change there. The economic freedom is opening 

up. It hasn’t resulted in a change in political freedom. You find the 

average, the average Chinese citizen in most urban areas, and now 

that’s the majority of them, owns an apartment. They have a mortgage. You know, I mean, it’s changing. So we don’t know what the 

outcome will be. I think what we need to do, again, is to identify 

the most critical technologies and military systems—well, not military systems—but military, dual-use technologies where the United 

States is so clearly ahead and ensure we protect them. But we 

should not be protectionist about keeping Chinese citizens out of 

this country or out of our universities. 

Mr. KING. Thank you. 

55

Dr. Wulf. 

Mr. WULF. I think we all should put emphasis on how we get 

more U.S. students to study math and science. Just as you pointed 

out, post-Sputnik, it became a national priority, and by George, a 

whole bunch of people from my generation took math and science, 

became engineers and scientists. And we’re living off of them now. 

The trouble seems to me, is that science and technology is not particularly a priority in this country right now. I just got a letter to 

make a nomination for the Millennium Prize. This is a million euro 

prize that’s put up by the Finns. Now if I remember correctly, there 

are 4 million Finns. So it’s kind of a third of New York City. And 

they put up a yearly million euro prize. We haven’t awarded the 

National Medals in Science and Technology for the last 3 years. 

We’ve named them, but they haven’t been awarded. It’s not been 

enough of a priority for the President to do that. We have our funding for physical science and mathematics, engineering research has 

been flat or declining for 2 decades. Total research budget is going 

up, but it’s all going into the life sciences—I just read this—as our 

society as a whole doesn’t believe that is a priority. And boy that’s 

communicated to the young kids, and they don’t see that they 

should be doing all that hard work when there’s no reward for it. 

Mr. KING. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Mr. HOSTETTLER. I thank the Chairman. 

Ms. JACKSON LEE. Mr. Chairman, would you yield for just a moment? 

Mr. HOSTETTLER. Yes, I yield to the gentlelady. 

Ms. JACKSON LEE. Dr. Wulf posed this question before, and I 

won’t ask you to repeat it. I’ll just make this statement because I 

heard your answer to Congressman King’s comments. This is not 

the Science Committee. Both Congresswoman Lofgren and myself 

are Members of the Science Committee. And I would simply say 

that the dearth and the problem is even wider than you might have 

expressed here. There has to be a parallel effort in order to surpass 

or to overcome the dilemma that we’re in. National security, more 

resources in intelligence, but over here, a ramping up of the training of Americans in the sciences and the mathematics and the encouragement of grad students and professors and researchers and 

more dollars in basic research. Thank you. 

Mr. HOSTETTLER. The Chair feels compelled to make an addition 

to the record given my background. Being an engineering student 

in the late seventies and early eighties, I can’t remember a single 

Federal Government program that encouraged me to become an engineer. I do remember the influence of family and community and 

of the economy and the fact that I was encouraged to follow my desire to study that which I enjoy which is math and physical 

sciences. It just so happened that my graduation also coincided 

with one of the largest build-ups of the United States military 

where there was a huge demand for the applied sciences. And the 

fact that I also graduated at a time when the nuclear industry was, 

had gained ground. But as a result of a very limited number of unfortunate incidents in that industry, caused that industry to almost 

evaporate from future growth. Virtually all of my encouragement 

came not from the Federal Government, but came from a robust 

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economy and a strong understanding of the strong national defense, which all of those needed engineers, and there was a tremendous demand for that. I think if we see a, I think we can—it’s inversely proportional to the level of attendance that’s been taken on 

by the Federal Government. Since I have been in Congress, as an 

engineer, I’ve heard continually about this, about the fact that 

we’re spending more in the Federal Government on attention to 

science and engineering and that we are getting fewer American 

scientists and engineers. It made, once again—this is not, to reiterate, this is not the Science Committee. But this is a Committee 

that is going to look into in the coming months the issue, one of 

the issues that was touched on briefly here, and that is how we— what is the relationship between foreign-born, foreign nationals 

and our institutes of higher learning with regard to engineering 

and science and why people aren’t doing what they did in the late 

1970’s, and that is going into engineering in fairly large numbers. 

If I remember, the fact that there were a few people that were kept 

out of the programs because of restrictions on attendance at that 

time. So I just make that addition simply out of experience. 

And I appreciate the input of all the members of the panel. Your 

testimony has been highly effective and highly beneficial to this 

discussion. All Members will be allowed 2 days to make additions 

to the record. The business before the Subcommittee being complete, we are adjourned. 

[Whereupon, at 4:11 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

MAP ON THE ‘‘NUMBER OF PATENT APPLICATIONS AND FOREIGN STUDENTS PER COUNTY,’’ SUBMITTED BY THE HONORABLE JOHN HOSTETTLER, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF INDIANA, AND CHAIRMAN, SUBCOMMITTEE ON IMMIGRATION, BORDER SECURITY, AND CLAIMS


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PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS, AND RANKING MEMBER, SUBCOMMITTEE

ON IMMIGRATION, BORDER SECURITY, AND CLAIMS

The subject of this hearing is, ‘‘Foreign Nationals Engaged in Economic and Military Espionage.’’ According to the National Counterintelligence Executive Office’s report to Congress this year, individuals from almost 100 countries attempted to acquire sensitive United States technologies in FY2004. The report concludes that foreign access to sensitive information with both military and commercial applications 

has eroded the United States military advantage, degraded the U.S. Intelligence 

Community’s ability to provide information to policymakers, and undercut U.S. industry. 

The report states that we are vulnerable to such espionage because the openness 

of the United States has provided foreign entities with easy access to sophisticated 

American technologies. New electronic devices have vastly simplified the illegal retrieval, storage, and transportation of massive amounts of information, including 

trade secrets and proprietary data. Globalization has mixed foreign and American 

companies in ways that have made it difficult to protect the technologies these firms 

develop or acquire, particularly when that technology is required for overseas operations. Lastly, sophisticated information systems that create, store, and transmit 

sensitive information have become increasingly vulnerable to cyber attacks. 

Apparently, the Counterintelligence (CI) Community is uncertain about exactly 

how much of the intelligence collection effort is directed by foreign governments and 

how much is carried out by private businessmen, academics, or scientists for purely 

commercial or scientific purposes. It is clear, however, that some foreign governments do employ state actors. This includes their intelligence services as well as 

commercial enterprises. Most of the foreign governments that are attempting to acquire American technology employ tools and techniques which are easy to use, inexpensive, low risk, and sometimes legal. In most cases, foreign collectors simply ask 

for the information via e-mail, a phone call, a FAX, a letter, or in person. 

The report asserts further that increased demand for foreign labor in United 

States high-tech industries and the sharp rise in foreign investment in the United 

States over the past decade have given foreign governments increased access to 

American businesses and, consequently, to U.S. trade secrets. In addition, recognizing the mutual benefits of an unhindered exchange of information, the United 

States opens its military bases, national laboratories, and private defense suppliers 

to foreign visitors. There were more than 14,000 requested visits to official U.S. facilities in FY2004. Although facilities hosting foreign visitors generally employ security measures to minimize the loss of trade secrets and sensitive technologies during 

these visits, the CI Community continues to see reports of losses. 

These are real concerns. Nevertheless, the visits from foreign nationals are valuable to American companies and the United States government. Also, many American industries need highly educated professionals from other countries. The employment of such foreign professionals has increased American productivity and resulted in more jobs for American workers. In the science-oriented sectors, for instance, employers often need a professional with cutting edge skills and unique expertise and find that qualified American workers are not always available to fill 

these positions. In other fields, such as education, shortages exist in specific areas 

of the country and positions continue to go unfilled. 

Foreign students represent half of all United States graduate enrollments in engineering, mathematics, and computer science. We do not have enough United States 

students graduating with advanced degrees to fill the highly specialized positions 

and, according to the Bureau of Labor Statistics, the demand for these graduates 

will increase. 

Foreign countries, such as Germany, have updated their immigration laws to attract highly educated talent. If our immigration laws do not allow these professionals with cutting edge knowledge to remain in the United States, they will go 

to work for our competitors and additional jobs that could have remained in the U.S. 

will follow them abroad. The result will be American jobs lost and American projects 

losing out to foreign competition. 

Thank you.

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NEW YORK TIMES ARTICLE SUBMITTED BY THE HONORABLE ZOE LOFGREN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA


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THE NATIONAL COUNTERINTELLIGENCE STRATEGY OF THE UNITED STATES, SUBMITTED

BY THE HONORABLE MICHELLE VAN CLEAVE, NATIONAL COUNTERINTELLIGENCE EXECUTIVE, OFFICE OF THE DIRECTOR OF NATIONAL INTELLIGENCE


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REVISED PREPARED STATEMENT OF DR. LARRY M. WORTZEL, VISITING FELLOW, THE HERITAGE FOUNDATION

Mr. Chairman, Members of the Committee, 

Thank you for the opportunity to testify today on the theft of national security 

sensitive technology in the United States. As a former military intelligence officer 

who has tracked the activities of the People’s Liberation Army and Chinese intelligence services for 35 years, I know of no more pervasive and active intelligence 

threat to America’s national security than that posed by the People’s Republic of 

China. The work force available to the Chinese government and its corporations to 

devote to gathering information in the United States is nearly limitless. There are 

some 700,000 visitors to the United States from China each year, including 135,000 

students. It is impossible to know if these people are here for study and research 

or if they are here to steal our secrets. The sheer numbers defy complete vetting 

or counterintelligence coverage. 

In 2003, for example, the State Department granted about 27,000 visas to Chinese 

‘‘specialty workers,’’ the H1-B visa. Some of these were intra-company transfers 

coming to the United States from US firms operating in China. Between 1993 and 

2003, the United States has granted an average of 40,000 immigrant visas to Chinese each year. The sheer magnitude if these numbers presents a great challenge 

to the Federal Bureau of Investigation, particularly when the US is also concerned 

about terrorism, which occupies a lot of investigative time for agents. 

The Chinese People’s Liberation Army and the defense establishment in China 

started programs in the late 1970s and 1980s to create companies designed to bring 

in needed defense technology; the goal was to produce defense goods for the PLA 

and for sale to other countries. The General Political Department of the People’s 

Liberation Army started a proprietary company, Kaili, or Kerry Corporation, that 

for years operated in the U.S. as a real estate and investment company. The General Equipment Department of the PLA operated a proprietary company, 

Polytechnologies, or Baoli, that had offices here in the U.S. In addition, the General 

Logistics Department operated a proprietary called Xinshidai, or New Era, that had 

offices in our nation and continues to be responsible for a network on PLA manufacturing plants in China. These technically are independent legal entities under Chinese law, but the Central Military Commission of the Chinese Communist Party established them to serve the interests of the PLA and the military industrial complex. Active or retired officers of the PLA or their families originally staffed these 

companies. The PLA and related defense science and technology research and development organizations in China regularly operate trade fairs to attract American 

high technology into China. 

The Deputy Undersecretary of Defense for Technology Security and 

Counterproliferation has testified that there are between 2,000 and 3,000 Chinese 

front companies operating in the United States to gather secret or proprietary information, much of which is national security technology or information. The deputy 

director of the Federal Bureau of Investigation for counterintelligence recently put 

the number of Chinese front companies in the U.S. at over 3,200. Many of these 

front companies are the spawn of the military proprietary companies discussed in 

the preceding paragraph. 

The nature of the Chinese state complicates the problem of knowing what the 

large numbers of travelers and students from China are actually doing. China is 

still an authoritarian, one-party state led by the Chinese Communist Party with a 

pervasive intelligence and security apparatus. The Chinese government is able to 

identify potential collectors of information and, if necessary, to coerce them to carry 

out missions on behalf of the government because of the lack of civil liberties in 

China. Let me quote the first three sentences of Chapter 1, Article 1, of the Chinese 

Constitution: ‘‘The People’s Republic of China is a socialist state under the people’s 

democratic dictatorship led by the working class and based on the alliance of workers and peasants. The socialist system is the basic system of the People’s Republic 

of China. Disruption of the socialist system by any organization or individual is prohibited.’’

The People’s Republic of China is methodical in its programs to gather information from abroad. In March 1986, the PRC launched a national high technology research and development program with the specific goal of benefiting China’s medium and long-term high technology development. This centralized program, known 

as the ‘‘863 Program’’ for the date when it was announced, allocates money to experts in China to acquire and develop bio-technology, space technology, information 

technology, laser technology, automation technology, energy technology and advanced materials. The 863 program was proposed by China’s strategic weapons scientists to emphasize strategic civil and military technology development. Thousands 

76

of students and scientists were sent abroad by China over the years to pursue critical civil and military, dual-use technologies. This practice still continues. When I 

was at the American Embassy in China and conducted due diligence checks to confirm the nature of Chinese companies seeking to do high technology business in the 

United States I most often found that the address identified for a company on a visa 

application turned out to be a People’s Liberation Army or PRC government defense 

research institute. Thus, the United States faces an organized program out of China 

that is designed to gather high technology data and equipment of military use. 

My colleague today, Mr Maynard Anderson, will discuss some of the ways that 

our government and industry can defend against intelligence gathering by China 

through defensive counterintelligence and security education programs. It is also 

important to know that we have other programs to screen out people coming to the 

United States to gather our trade or military secrets. In January 1998, the VISAS 

MANTIS program was developed to assist the American law enforcement and intelligence communities in securing U.S.-produced goods and information that are vulnerable to theft. Travelers are subject to a world-wide name-check and vetting procedure when they apply for visas. The security objectives of this program are to prevent the proliferation of weapons of mass destruction and missile delivery systems; 

to restrain the development of destabilizing conventional military capabilities in certain regions; to prevent the transfer of arms and sensitive dual-use items to terrorists; and to maintain United States advantages in militarily critical technologies. 

This program operates effectively and can vet a Chinese student in as few as 13 

days. Non-students may take longer, as many as 56 days. However, I can tell you 

based on my trip to China two weeks ago that the American Embassy in Beijing 

and the Consulate in Guanzhou are able to process and vet in about two weeks 

visas for non-student travelers who fully and accurately outline the purpose and 

itinerary of their trip. Still, many U.S. companies complain about delays in getting 

visas for travelers they want to bring to the United States. Automation and datamining software can speed visa processing to ensure these companies can be competitive. The government also operates a ‘‘technology alert list’’ to identify legal travelers from China that may benefit from exposure to advanced U.S. technology with 

military application. Of course, the consular officers manning visa lines in embassies must be trained to look for signs of espionage for screening to be effective. 

Many provinces and municipalities in China now operate high technology zones 

and ‘‘incubator parks’’ specifically designed to attract back Chinese nationals who 

have studied or worked overseas in critical high technology areas. When students 

or entrpreneurs return with skills or knowledge that the central government deems 

critical they are given free office space in the parks, loans, financial aid, and administrative help in setting up a business designed to bring in foreign investment and 

technology. Their companies are given tax holidays. Innovative programs such as at 

Beijing’s Zhongguancun High Technology Park and Guangzhou’s High Technology 

Economic and Trade Zone get central government help. These are admirable programs that will develop entrpreneurial skills among well-educated Chinese citizens. 

However, as students and employees of U.S. companies return home, it is important 

to know that they are not taking back American economic or military secrets. Good 

counterintelligence and industrial security programs are very important to U.S. security given this threat. 

Mr. Chairman, the enforcement of intellectual property protection laws in China 

is spotty and inconsistent at best. This is one of the major complaints of American 

high technology companies about China’s compliance with its obligations under the 

World Trade Agreement. It will certainly be a subject discussed by President Bush 

and Chinese President Hu Jintao this week. The tendency to steal intellectual property and high technology secrets in China is worsened when intellectual property 

laws are not enforced there. And the problem is further exacerbated when centralized Chinese government programs, such as the ‘‘863 Program’’ I mentioned earlier 

in my testimony, are specifically designed to acquire foreign high techology with 

military application. This only creates a climate inside China that rewards stealing 

secrets. 

I believe that U.S. government security, intelligence and law enforcement agencies must focus on the national security. They should be looking for acts of espionage and for violations of the Arms Export Control Act or the Export Administration Act. When it comes to corporate or industrial espionage that is not a matter 

of national security, I believe that the government owes American companies a good 

legal infrastructure to protect trademarks, patents and copyrights; a system of education on industrial security; and a strong effort to ensure that China meets its own 

obligations to create a rule of law that protects the right of ownership and intellectual property. However, I do not believe that American intelligence or security agencies should focus on forms of economic espionage that do not involve national secuVerDate 0ct 09 2002 11:42 Dec 22, 2005 Jkt 000000 PO 00000 Frm 00080 Fmt 6601 Sfmt 6621 G:\WORK\IMMIG\091505\23433.000 HJUD1 PsN: 23433
77

rity information. From the standpoint of Congressional action, my view is that the 

Congress should reconsider the Export Administration Act with a view toward ensuring that its provisions meet the needs of 21st century technology. The 1979 Export Administrtion Act expired in 2001. The Senate passed a new Act in 2001, but 

no revision passed the House. And the Executive Branch must regularly review the 

Commodity Control List to ensure that appropriate national security controls on exports protect the nation’s security but do not unduly restrict the ability of American 

industry to compete in the world market. Generally, technologies that are widely 

available on the world market and not unique to the United States should not be 

unduly restricted unless they can be subject to mulitlateral export controls. 

Finally, we cannot become paranoid and suspect that every traveler, student and 

businessman from China is a spy or is out to steal technology. Many of the people 

that come to the United States absorb our values and bring them home. We must 

keep in mind that in earlier decades, in places like the Republic of China on Taiwan 

and in South Korea, the steady flow of returning students and immigrants who were 

exposed to American values and principles eventually eroded dictatorships and produced multi-party democracies. The prudent course of action for the United States 

is to maintain law enforcement programs, counterintelligence programs, security 

education and industrial security programs as the means to protect our nation. 

Thank you for your invitation to testify today.

Æ